New 'stealth tax' hits higher earners

Chancellor Gordon Brown was accused of hitting the better-off with a new stealth tax after it emerged around one million higher earners face paying an extra £200 a year in National Insurance.

The extra charge for those earning at least £29,900 a year will come in from April next year after Wednesday's pre-Budget Report proposed a 7.5% rise in the upper limit of NI contributions - three times the level of inflation.

The proposal, likely to raise around £200m for the Treasury, was unearthed by accountants who studied the fine print of Mr Brown's documents. The Chancellor made no mention of the proposal in his Commons statement - leading to Tory charges he was sneaking in the measure.

Shadow Chancellor Michael Portillo claimed: 'This is yet another stealth tax which will make people such as senior nurses and experienced teachers around £200 a year worse off. As always with Gordon Brown's statements, a tax rise which he didn't announce has appeared in the small print.'

The rise was foreshadowed in Mr Brown's 1999 Budget. Peter Horsman, national tax partner at accountants Saffery Champness, claimed: 'This is a further way of extracting more tax from earners without raising headline rates of tax. The increase is double what we expected and will affect a lot of people.'

John Whiting, tax partner at PricewaterhouseCoopers, said: 'The Government has been quiet about raising the upper limit. It is a type of stealth tax because not many people realise it is happening.'